Valuing ASM International in the AI Semiconductor Revolution: A Supply Chain Re-rating Thesis

The semiconductor industry is undergoing a seismic shift driven by AI infrastructure demand, with South Korea's Samsung and SK Hynix emerging as linchpins in OpenAI's $500 billion Stargate initiative. For investors, this creates a compelling narrative for re-rating the valuation of enablers like ASM International (ENXTAM:ASM), whose Atomic Layer Deposition (ALD) and epitaxy (Epi) equipment are foundational to advanced memory production.

The Stargate-Driven Semiconductor Surge

OpenAI's Stargate project, aimed at building a global network of AI data centers by 2029, has triggered a surge in demand for high-bandwidth memory (HBM) and DRAM. Samsung and SK Hynix are scaling production to meet OpenAI's projected requirement of 900,000 DRAM wafers per month-a figure representing ~40% of global DRAM output, according to Tom's Hardware. This demand is not merely incremental; it reflects a structural shift in AI infrastructure, with HBM becoming the backbone of next-generation AI models.

For context, SK Hynix overtook Samsung in Q1 2025 to claim 36.3% of the global DRAM market, driven by its dominance in HBM3e shipments, according to Gilder Research. Samsung, meanwhile, is pivoting to internalize HBM production and accelerate HBM4 development, Digitimes reports. Both companies are expanding their wafer capacity, with SK Hynix targeting 170,000 HBM wafers annually by year-end, according to SemiconSam.

ASM International's Strategic Position

ASM International's ALD and Epi equipment are indispensable for manufacturing advanced memory at nodes like 2nm and 1.4nm. ALD, which accounts for over half of ASM's equipment revenue in Q1 2025, is critical for processes such as high-k dielectric deposition and barrier layer formation in HBM and DRAM, according to Bald Engineering. The company's single-wafer ALD platforms, including the XP8 QCM and Previum Pro, are widely adopted in leading-edge memory production, Bald Engineering notes.

While no explicit contracts between ASM and Samsung/SK Hynix for Stargate-related production have been disclosed, the industry's shift to gate-all-around (GAA) architectures and 4F2 DRAM technology is expected to add $400–450 million to ASM's served available market (SAM), according to the company's ASM Investor Day. This aligns with SK Hynix's recent diversification of its TCB equipment supply chain, including a 2024 order of 30 TCB machines from ASM Pacific Technology (ASMPT), Digitimes reports. Though not directly tied to Stargate, this move underscores the broader industry reliance on ASM's ecosystem.

Margin Expansion and Long-Term Valuation Catalysts

ASM's 2030 targets-$5.7 billion in revenue and 30%+ operating margins-hinge on AI-driven demand for ALD and Epi tools, as outlined at the Investor Day presentation. The company's gross margin guidance of 47–51% for 2026–2030 reflects confidence in its pricing power, driven by its 55%+ market share in single-wafer ALD and its leadership in AI/ML-enabled process optimization, according to Cash Platform.

The Stargate project amplifies these dynamics. As Samsung and SK Hynix ramp HBM production, their reliance on precision equipment like ALD and Epi will deepen. For example, SK Hynix's HBM4 roadmap, slated for mass production by Q4 2025, requires advanced deposition techniques that ASM's tools are uniquely positioned to provide, as SemiconSam outlines. This creates a flywheel effect: increased wafer demand → higher equipment utilization → margin expansion for ASM.

Risks and Mitigants

Short-term headwinds include ASM's revised 2025 guidance, with H2 revenue projected to fall 5–10% below H1 due to weaker demand in logic/foundry segments, as discussed at the Investor Day. However, the AI-driven memory boom offsets this, with analysts estimating $72 billion in incremental revenue for Samsung and SK Hynix over four years from Stargate. This scale of investment is likely to translate into sustained equipment demand for ASM.

Investment Implications

ASM International's valuation currently trades at a discount to its long-term growth potential. With AI infrastructure demand locking in multi-year capacity expansions for Samsung and SK Hynix, the company's ALD and Epi tools are poised to benefit from a sector re-rating. Investors should monitor SK Hynix's HBM4 production timelines and Samsung's HBM4e roadmap as key catalysts.